F4 M1 questions

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During Year 3, Gilman Co. purchased 5,000 shares of the 500,000 outstanding shares of Meteor Corp.'s common stock for 535,000, During Year 3, Gilman received $1,800 of dividends from its investment in Meteor's stock. The fair value of Gilman's investment on December 31, Year 3, is $32.000. Gilman has elected the fair value option for this investment. What amount of income or loss that s attributable to the Meteor stock investment should be reflected in Gilman's eamings for Year 37 A Income of $4,800. B. Income of $1,800. C. Loss of $1.200 D. Loss of 3,000 Explanation Chaice "C" is correct. Gilman Co. would recognize a loss of $1.200. Gilman has selected the fair value option. Therefore, the dividends of $1,800 received by Gilman Co. are recognized in net income. The unrealized holding loss on the investment of $3,000 (inital purchase price of $35.000 less fair value at December 31, Year 3, of $32.000) is also included in net income.
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